Hedge Fund guru George Soros warned over the weekend, in an interview with The Daily Telegraph, that " the crude oil market had been significantly affected by speculation." Because of all the speculators driving the price of crude higher and higher, Soros went on to say, "Speculation... is increasingly affecting the price, the price has this parabolic shape which is characteristic of bubbles."

While I tend to disagree with Soros when he predicts that we are headed for a very deep recession, I do think that there isn't much justification to $130+ per barrel of crude. After all, the continuing cry of increasing demand falls short, when the big consumers of oil, are experiencing slower economic growth. After the Olympics, I wouldn't be surprised to see Chinese growth take a sharp fall as well, as many of the public works projects come to an end.

I think that potentially, we will see crude oil fall back to the $50-60 per barrel level.

Aaron Katsman is Senior Portfolio Manager of the Israel Growth Portfolio, of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/27/08

With investors awaiting the Fed's interest rate decision, the focus of the decision will be felt in the currency markets. In an AP report: "The Federal Reserve is poised to deliver another interest rate cut to millions of people and businesses this week, although that could be the last break they get for a while."

This scenario may be just what the doctor ordered for the dollar. In anticipation of the announcement, the greenback has staged a minor technical rally, albeit on lackluster volume. If the currency market would get the news that future rate cuts are on hold, the dollar may very well start a recovery.

The reason for the recovery is twofold: Firstly, there is interest rate differential. This has been the major driver in the currency market over the last few years. If the Fed would signal an end to rate cuts, by definition this would mean that the differential would no longer widen. The second reason is economic growth. The US was the first major country in the world to enter this period of lackluster growth and with the steps taken( fiscal stimulus and rate cuts), the right measures were implemented to make sure that the US is the first country to get out of the mess. My hunch is that we will see currency markets move away from the 'interest rate differential trade' to that of one focused more on growth.

As I have mentioned many times, the situation in the Euro-zone is nothing to write home about. Surging inflation, slow growth, the banking sector in turmoil. Sounds familiar. The only difference is that the ECB has done nothing to try and right the ship, while the Fed has. Ultimately, when the US gets back to above-average growth late this year or early '09, the aggressive stance the Fed took will be viewed as the reason for the recovery.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/29/08